Housing starts shot up 6.7 percent in July, the fourth straight monthly advance and the biggest in 16 months, as builders sought to meet buyer demand strengthened by lower mortgage rates.
Construction advanced in both the South and West, which offset declines in the Midwest and Northeast.The Commerce Department said Wednesday that starts totaled 1.38 million at a seasonally adjusted annual rate, up from a revised 1.29 million in June. The June rate initially was estimated to be 1.26 million.
The jump in July was the largest advance since builders began new construction at a 14 percent annual rate in March 1994.
The department also revised the May rate to a 1 percent gain, rather than a 0.4 percent loss. Starts had risen 2.5 percent in April following a 6.5 percent drop in March.
The July increase was more than twice the 3 percent increase that analysts had expected as builders boosted construction to keep up with sales activity. Sales of both new and existing homes increased in both May and June.
Thirty-year, fixed-rate mortgages averaged 7.61 percent in July, well below the 9.15 percent rate in January 1995.
The monthly payment on a $100,000 mortgage with a 7.5 percent interest rate is $699, while the payment on the same loan with a 9 percent rate is $805 - a difference of $106.